There is a lot of backstory here that I should mention that might help shed light on this matter.

About six years ago I took on the task of making the production schedules from the previous guy. I noticed that the way he scheduled the models did not make for the most efficient production line. He would schedule a week of 330's, then a week of 4003's, the a week of 660's... you get the idea. What this meant was that every week we had to move fixtures and tools around on our CNC machines, tools that were model specific in order to get that production order out for that week. This is referred to "changeover" time in manufacturing.

Essentially, we spent a great deal of production time NOT making parts, but preparing to make parts. In order to reduce the changeover time, I simply put a string of models together so that we now make 4003's for a minimum of two weeks, often more, in a row. That way, tools and fixtures stay on the machines longer, meaning more time to make guitar parts. After about five years of planning production like this, there has been a definite decrease in the backlog as evidenced by the amount of stock dealers have these days and what our backorder reports say.

However, this is only one part of the story. In 2009 the ailing economy hit our industry hard. Of course, Fender and several other well-known guitar companies are located in Souther California, so I know a lot of people at those companies and we share many of the same suppliers. What I heard was pretty scary. Fender laid off a bunch of people and cut the hours of the folks that remained. In fact, several of their ex workers came to me asking about employment.

A large acoustics maker (now electrics too) in San Diego also laid off a number of employees and went to a four day work week. They also had something like 18,000 guitars sitting in a warehouse that they could not sell. The irony of this bit is that they had touted the fact that they had produced, for them, a record 80,000 guitars that year. Another acoustics maker in the LA area didn't sell a single guitar for six months and I know this because one of their guys worked for us that year.

Needles to say, this didn't just affect companies out here. Gibson canned a bunch of people, as did PRS (there is a Fox News story about this on Youtube). One of those companies also asked for and received federal stimulus funds to "retrain" the workers that were left. There is news article about that too.

Several longstanding dealers shut their doors forever, and one of the most important suppliers of finish coatings in our industry filed for Ch.11 and could not hold on, even though they were bailed out by their two most important guitar company clients. There were whispers of bankruptcies related to the biggest names in our industry and it looked pretty shaky. My neighbor works for Yamaha Music and even he said in the pianos sector they were holding meetings every day trying to figure a way to drum up business as it had slowed considerably.

During all that time, RIC did not lay off a single worker or cut any shifts. In fact, we hired people, some of them cast off from the other makers. The climate improved in 2010 and 2011 and now everybody is back on solid ground it seems, but seeing 2009 unfold illustrated the perils of reckless expansion for expansion's sake. One of the heads of the companies hardest hit is quoted as saying that "if you don't expand, you die." What I took from that year was that if you expand recklessly, you die. We continue to increase output every year, but we do it in a controlled manner. This is RIC's 81st year in business by the way.

Ain'tGotNoPokemon

Post subject: Re: Rics-Retain high value even in recession

Posted: Sat Jan 28, 2012 1:33 pm

Joined: Sat Sep 17, 2011 6:10 pmPosts: 756Location: Georgia

Thanks Ben. Your explanation is kind and professional!

I would like to clear up my question on expansion, though... I did not mean a huge expansion, a quick one, or a sudden one. I figured if more and more orders came in, even after prices were adjusted a little, there may either be a longer waiting list, or need for some (As in some, not a lot) expansion. Again, if Rickenbacker did expand, even I realize it would not be done hastily or without a careful eye for detail.

So, I never meant to suggest anything to anyone about anything. I was only asking, in the words of Steppenwolf! I am glad both John and Ben understand this.

Gosh, Ben. You make me proud to own a Ric, and I have little pride.

cassius987

Post subject: Re: Rics-Retain high value even in recession

Posted: Sat Jan 28, 2012 5:19 pm

Joined: Mon Mar 05, 2007 12:33 amPosts: 3403Location: Denver

Thanks to both Mr. Halls who contributed to this thread, and I have to agree with AGNP, it does make me a bit proud to read accounts like this. Of course the folks who should really be proud are those at RIC.

Indeed! Thanks both John Hall and Ben Hall. I know these have not been easy times, particularly here in the "Golden State" I just know from years of practical business experience, making nervous jerky moves in any market cycle is never a good thing.

My email in-box is peppered every single day with "specials" on everything under the sun with some amazing deals including rare fine wines. I remain confident that we'll all climb out of this economic thing and I remain hopeful that some lessons that were learned the hard way won't be repeated.

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